18-MW Hydropower Kirirom-III

I am so happy to be here to witness the official operation of the Kirirom-III Hydropower Station of 18 MW in the district of Sre Ambel, Koh Kong province. This is the achievement, as was reminded by HE Suy Sem, Minister of Industry, Enregy and Mines, that is responding to my suggestion made at the inauguration of the Kirirom-I Hydropower Station since May 1, 2002. At the time, seeing the fact that we have water potential here – which only runs off to sea and ispartly used for rice cultivation, I proposed to the CEITEC compnay to extend their feasibility study in order to see if we could put into place the Kirirom-III hydropower station.

In fact the Kirirom-III hydropower was put into trial operation since April 2012, which is ten months as of today. We also have to reschedule the inaugural day twice, one from the company’s request and another on February 21 to 23 as I had to accompany the Queen Mother and HM the King to have medical checkup in the People’s Republic of China. We then rescheduled it to today which falls on a weekend day. I also have a family duty as well today as there is a wedding party of a nephew. However, this event cannot be rescheduled any more and there are more relatives who can be present at the wedding on my behalf too.

I am asking our participants here for their understanding that we have to organize the inaugural ceremony today that is your weekend break. However, I am sure some of you might have planned after the ceremony heading to Preah Sihanoukville for the beach or Kompong Speu or Phnom Penh golf courses.

Electricity Price Varies with Oil Prices

Today we have one more achievement to celebrate as far as hydropower is concerned. We have electric power connected and transfered from  the Kirirom-III to Kirirom-I and on to Phnom Penh. As is presented in the report by Minister of Industry, Energy and Mines, HE Suy Sem, our  need for electricity is even bigger but starting from 2013 throught to 2015, we will put more electric and hydropower stations into operation. While waiting for them, we are still facing shortage of power supply.

Taking this into consideration, certain areas in the country are facing with high prices for the electricity supplied by private companies who produce diesel-run electric power generation. This is the case for mostly areas that the state electric transmission lines have not come yet. As the electic production by private companies depend solely on diesel for the generation of electricity, the price of fuel fluctuates in the international markets. It is noted that the price of electricity goes up when the price of fuel has gone up, but it does not go back down when the price of fuel comes down. I urge the Electricite du Cambodge (Electricity of Cambodia) to review this situation.

We could understand that those companies still use the fuel they bought and stored from the time when the price was high. However, their stocks from then should not go on and on. All these are somewhat provisional as our objectives are to increase further production and install more transmission lines – both main stations and substations – to the most parts of the country so as to reach out to the people’s demand in every family.

BOT Form of Investment in Electricity Generation

Soon, from Tatai hydropower station, we will be able to get electric supply of another 120 MW and in 2014, 338 MW from the hydropower station of Russei Jrum Kraom and 246 MW from Atai hydropower station. Also in 2013, we also are hoping to generate electricity of 100 MW from coal and more in later stage. We are also planning to generate more hydroelectric power from Jiey Areng and electricity from coal as well. Along with this we also need to invest in putting up transmission line to channel the power to where it needs to supply.

Those invested in transmission lines are private companies and those credited from partners, People’s Republic of China also included. For what is done to get the electric generation here, we are applying BOT module of investment where after thirty years of operation, the facility will be  owned and operated by the state. We apply similar model in other hydroelectric investment projects with the difference noted on the length of operation periods – some 35 or 40 years. When that time comes, we on this podium would not be around or I may take another birth already. The ones that operation period last thirty years, I might be around.

First Come First Served Investment Policy

We still need to continue to attract more investments in terms of electricity generation. Based on investment potential – capitalwise and technologywise, most of them are from the People’s Republic of China. In some countries, they built the hydropower station themselves but they purchased equipments from the PRC, which produces the most  materials and equipments used in hydropower stations. Some people could have said why we only have investment from China. I would take this opportune moment to declare that the Cambodian policy vis a vis investment is “first come first served.” That is the first criteria defined in our investment policy. It would not be a matter at all whether one is investor coming from Japan, US or any country at all.

Another element in our policy is that we do not differentiate so from so or give so and so more priority. Everyone is to  have equal chance. As I said, we are exercising “the first come, first served” policy. Some people may argue that they would wait till after the general elections. Cambodia has no choice but to give the chance to those who would not have to wait. Those who neglect investment opportunity for the general elections should not  blame Chinese investors who do it on the contrary. They may raise an issue that so and so company now is small. Why don’t you wait for a much bigger companies that will come after the elections?

As we are hungry now? We would not wait for the big fish. We would eat any fish that comes by. I must put it this in simple terms. Not only companies coming from different countries, those coming from the same country also compete when the one that come before them are smaller and they are bigger companies. What can we do when that company came see us once and never shows up in three years? Let me affirm that our investment policy is those who come in first are to be served first. In fact the Chinese companies have been quite resolute in taking and implementing their investment projects.

Three Favorable Factors in China’s Investments

Take for instance, this area had been mined. According to the report of HE Keat Chhon, we have spent a sum of 1,366,475 USD to liberate a size of 6,885,300 square meters. The Chinese company has taken up the challenge to conduct their studies for the hydropower stations of Kirirom-I and Kirirom-III while other companies had abandoned them. So one of the three critical points of the Chinese investment in Cambodia is to take up the country’s challenges and be resolute in adjusting their investment projects in accordance with their Government’s directions and in line with the recipient country’s demand and objective.

The second point is that China has both technology and various equipments/materials made in the country. In so far as we know, in the world, there has not yet any country that builds and operates any hydropower dam bigger than the PRC. According to some of the studies, the PRC stands number one followed by Brazilia and Paraguay, Venezuella, Canada and the US. So it is not Cambodia that invests in many hydropower stations. It is those countries that do but they seem not to have problem with the environment. While in the case of Cambodia, there have always been complaints on possible environmental impacts.

As for the third factor that allows the PRC to make better investment decision is while other countries hesitated in putting money elsewhere for the financial crisis and economic downturn, those companies from the PRC did not lose their momentum at all. They either use their own capital or those from the China’s state banks in funding investment projects. Within the framework of ASEAN-China relations where there has always been the participation of Chinese Premier HE Wen Jiabao, I noted that he always declares that the PRC reserves ten billion USD per annum for investments, a part of which to be used by private sectors, in ASEAN countries.

We have done the best we can to attract the investments both state and private from the declared ten billion USD. I just do not want to reveal it here but some companies, not from China, who have chosen to come invest in Cambodia have sought capital loans from the World Bank, IFC, ADB, etc. Some have even asked for the Royal Government’s assurance letters to back up their loan requests. If that is what needs to be done, we told them, why don’t we ask for loan and do it  ourselves? That is easier.

Well, to stress again for those who came around asking why there are only investment from (the People’s Republic of) China. While others do not come, the ones from China do. That is what happened. Many showed up and disappeared. When they showed up they always told us of their huge capital – billion USD. However, they never were serious. Real investors in Cambodia are talking of tens or hundreds of million. It has been our experience to have heard those non-serious investors come talking to us in billions. It was hard to believe as some after telling us of their billion capital, they borrow us money for their travel.

Coal-run Electricity Generation Compensates Hydropower Loss in Dry Season

According to this report provided by HE Keo Ratanak, head of Electricity of Cambodia, looking at some of the figures about those producing hydropower the most, Cambodia is  not high on the list. The People’s Republic of China’s hydropower production has accounted for 171,000 MW looking at the figure released in 2009. For the same period, Brazilia and Paraguay produced 14,000 MW. Venezuela – a country bestowed with oil treasure, built a hydropower station that generates 10,200 MW or 64% of the energy produced from all sources. Canada produces 75,000 MW for own consumption and sale to the US. The US uses hydropower dams for both energy and irrigation. Among them, in 2010, some 2,540 dams are made for generating and supplying 10,000 MW electricity to 8,000,000 households, replacing fuel burning of up to 5,000,000 barrels.

If the US also has hydropower stations, where do they use the water for? Some people like to mention the US as reference to support their argument, while the US do not even know about it. They beg to be the US passive supporters while the US do not even know it. As I said in the general elections in 2008, it was lucky that the US passive supporters did not win the elections – as many of them backed up their promises with the US assistance – or the US would have to spend a lot of money so that those parties could keep their promises with the voters.

As of now we have put into operation the hydropower stations that generate over 200 MW – 193 MW from Komjai hydropower station, 18 MW from Kiririom-III and 12 MW from Kirirom-I. The hydropower is the most reliable source of electricity that are not subjected to fluctuation of oil prices. However, this amount has not been adequate to current demand. In the rainy season, the Kiriron-III operated in full of 18 MW but in dry season it has reduced to 9 MW only and for only six hours. The power from Komjai station has also lowered from 193 MW to only 60 MW. This has called for production of electricity from other sources, mainly coal.

In the dry season we hope to produce more power from coal-run station to compensate for the loss of power generated by hydropower stations untill we will have fuller capacity operation of the hydropower in rainy season. This 18-MW hydropower station, take for instance, because of limited size of water sources, full capacity could run for about one months before the water depletes. So we have not other choice but to generate extra power supply from coal-run technology. That is why I make it clear in the beginning that production of electricity is still a main concern.

Peace Makes Electricity Great Demand

Some may say it is so because Hun Sen has ended the war that many areas where before 1996 were in no demand of electricity have now sprouted up development following the implementation of the win-win policy that pacified all conflicted zones. Peace has brought about unexpected development and now we are in a state that everywhere demands electricity. In the older days, 1960s, 1970s and even 1980s, most of the houses used kerosene, tree sap, fish and torch oil to light up. As of now, if the transmission line is not there, the smaller generator will take its place, and further away car battery, from which people depend for their TVs and lighting up. Not many houses use kerosene lamps and/or candles anymore.

As our country is in peace, we now have to light up the cities, rural towns, ect. Elder people might remember that we used torch and tree sap in the old days for lighting. In 1960s, anyone with a kerosene lamp would be like the one with generator now. In a village of 200 houses, there might be ten houses or so with such lamps. The place with light was where people gathered together. As you can see the win-win policy has brought about various imporatnt stages of development. For instance, aside from higher demand for electricity, the numbers of vehicles and motorbikes have also made a high jump.

Maybe this is again because of the leadership. That is why we asked in the past if we were making efforts or not? We said yes we were. And why did we not have this situation? It was because of wrong policy that the country was always at war and people had to live and eat collectively, do hard labor day and night, and nothing more than rice porridge to consume. That was because of wrong policy. You may remember that starting in 1979 everyone were in their black suits, and most with bare feet.

Incorrect policies brought about war, killing, destruction, lack of demand for electricity and electricity itself. It is because of peace that we need more electricity. Without peace no one would build home and need electricity. The Cambodian People’s Party and I are those who would take up the responsibility. It is strange some of those who possess the motorcycles and/or motorcars but argue that they are now worse off.

No Heavy Industries along the Coast

Let us figure out how many cars travel from Phnom Penh to Preah Sihanoukville now. At this time, tourists are enjoying the sea. There was a question to me and I directed it to HE Mok Mareth, Minister for Environment. It was the request of the Council for the Development of Cambodia. I instructed we would not allow heavy industries – such as oil refinery, steel industry, etc. to stand at the Preah Sihanoukville, Kep and Kompot provinces, as these industries would cause pollution to the whole beach. That is why I deny a request to set up an oil refinery at Prek Toal.

In one of my visits to China, then Premier Zhu Rongji was seeking my advice on a steel mill in Stoeng Hao. I then advised him to let interested company to go to Koh Kong to work with HE Lyong Phat as we have decided to keep the southeastern beach of Cambodia as our rising star for the country as far as tourism is concerned. This year we have 3,580,000 tourists with roughly 2,200 million USD incomes. We cannot afford to lose this income from tourism. Please think about it. It is in this environmental concern that we do not wish to have more fuel-run factories anymore. However, we cannot avoid coal but it has to be a clean one for environment too.

Deceitful Neo-Polpotists and Sovereign Debt

I have noticed that now some people have spread their leaflets (with regard to the price of electricity). They said in leaflet that the electricity has to be at 500 Riel per KWH. I asked from where they will get the electricity. In every investment, we have conducted negotiations and secured approval from the National Assembly. Do they want to declare themselves as neo-Pol Potists or what? To bring the price of electricity to 500 Riel per KWH is like to violate the standing agreement. Aside from this, no country in the world could secure the price of electricity at 500 Riel per KWH. Is this not deceiving? They claim that they would bring the price of gasoline down to 1,000 Riel per liter. How could they while countries like Saudi Arabia, Kuwait, Venezuela, etc. – oil richest countries in the world – could not bring their prices of oil this low. These politicians have made themselves cheaters.

Talking about the sovereign debt, as of today, we are still in burden of paying back the debt incurred from the past, those hundreds of millions that the Lon Nol regime owed to the US also included. There was to development from that money at all. How could they help boost agriculture or anything else since Lon Nol controlled only the cities? We do not know in what they owe but perhaps in purchasing bombs dropped over Cambodian people’s heads. When the President of the United States was in Cambodia, I proposed to him that he abolishes certain amount of the debt whereas we will try to either pay back the rest at concessional interest rate or transfer it to development aid. They have not yet agreed to our proposal as of this time.

This is the sovereign state. Even though (it was a debt incurred) by an illegal government that overthrew Samdech Preah Norodom Sihanouk and brought Cambodia into the flames of war, where numerous people died of US bombardments, we still accept our responsibility to pay it back. How could these people promise to bring the price of electricity to lower than that approved by the National Assembly? Do they wish to ignore the state responsibility from now? They apparently apply a policy to take from the rich to give to the poor and that is why I say the neo-Pol Potists have come to haunt us in the 21 century. I do not make it a political preach, but only to remind you. They say our people are getting poorer but why our people’s electricity demand jumps up and we need to make more investments.

A Visit to China in April

I thank the CEITEC International for implementing this challenging project successfully and placing the station into official operation today. I also thank for the assistance provided by the Embassy of the People’s Republic of China to Cambodia. Through the Embassy, I would like to convey our thanks to the government of the People’s Republic of China that is always providing support and urging private investments to Cambodia. I am grateful to the Ambassador HE Pan Guangxie for his effort on all this. We have more construction sites to preside together in this year and coming years.

As of present, the People’s Republic of China offers Cambodia its tax favor in the sector that we need to invest in goods that are demanded by China, while our Chinese friends also have the chance to send in their investors to produce goods and export them to China. You may need to be reminded that the Chinese market is huge – 1,300 million people. Take for instance the province of Guangxi with about 47 million people has a much bigger production than Cambodia. We have also secured three favorable conditions for their investors – the loan, grant and concessionary loan from China. Lately, the State of the People’s Republic of China has urged the Chinese companies and investors to direct their investments to Cambodia. That has responded entirely to our wish. We do not want more loans but investments.

We could not afford to avoid borrowing money from China as many countries, including those in Europe, also are begging for loans for paying their staff. Cambodia is in need for loan for speeding up its economic growth. Does not it sound different? While urging their investors to come invest in Cambodia, we know that the Chinese state is securing capital for them. On this note, for all projects in Cambodia, not even a single project fails to meet its deadline. They are even finishing them before deadlines too. They can achieve this because they have sufficient capital. Moreover, the Bank of China is backing them up. All of this has promoted the Chinese-Cambodian relations to a new stage.

In my visit to the People’s Republic of China in 2010 and the return visit of President Hu Jintao in 2012 and then Premier Wen Jiabao again also in 2012, the two sides agree to raise their bilateral relations to the state of comprehensive strategic partnership. If all goes according to plan, I will conduct a visit in April 2013 to the People’s Republic of China to meet with the new Chinese leaders, who are taking over leaderships from HE Hu Jintao and HE Wen Jiabao in March. We will then bring new inputs to the comprehensive strategic partnership with our Chinese friends. We will speed up cooperation in economics, trade, investment and other areas, especially tourism as the number of tourists coming from China has now stood at number three on top of the list.

The Last Year of Rectangular Strategy Phase-II

I also thank and appreciate the efforts made by the Ministry of Industry, Energy and Mines, the Ministry of Economy and Finance as well as the Electricity of Cambodia, the local authority of the Koh Kong province’s Sre Ambel district and the armed forces, the demining team included. Those who demined this area are not from CMAC or Engineering teams of the Ministry of National Defense. They are trainee de-miners of the centre for demining in preparation for missions in foreign countries, like Sudan and Lebanon.

We have more works to do while we are achieving so much. This is also the last year for us to implement the Rectangular Strategy Phase-II where we have to make further efforts to promote 7% economic growth as we already did 7.3% for last year./.